The diamond market is traditionally segmented into three categories. (Chang, 2002) These are as follows:
The Jewelry and Investment categories constitute the largest market share in terms value. It is about 83 percent of the value of rough diamonds produced globally.
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The global diamond market is led by a few, large companies which are mostly involved in several functions throughout the segments of the global diamond value chain i.e. exploration, production, retailing, etc. (Chang, et. al., 2002) The industry is difficult to categorize according to country because the diamond players expand its operations to various parts of the global value chain in various locations. (Rudnicka, 2010) As such, this paper shall limit the competing diamond companies on the following major players: De Beers, ALROSA, Aber, Leviev, Rio Tinto, and BHP Billiton. As described above, De Beers leads the global diamond market but at present, there are other players who are trying to carve their names in the industry. A few of them focuses mainly on diamond mining and production while others focus on mining and materials works.
Its hold on the uncut diamond market was weakened as competitors like Australia's Ashton Mining, now part of Rio Tinto Group, decided to sell their own stones and new mines were developed in Canada. De Beers' competitive advantage rests on its historical leadership and well established diamond explorations and mining operations all over the world. It is trying to carve out other competitive edge since the diamond industry altered its monopolistic model into a more open and competitive one. (Chang, 2002)
ALROSA is also involved in power generation. It generates power through hydroelectric power plants. It is currently involved in constructing a hydroelectric power station on the Chicapa River, Angola. This plant is called HydroChicapa-2. It has also started constructing internal power supply lines for the provincial capital. ALROSA has a distribution agreement with The Diamond Trading Company, the marketing arm of De Beers. However, it has successfully reduced its diamond supplies to De Beers and has initiated its own diamond marketing and selling. It aims to support the Russian government through its diamond sales growth.
Diavik Diamond Mine produces about 8 million carats since 2004. Through its stakes, Aber controls around 3 percent of the global diamond production in terms of value. (Harry Winston Website, 2010) Aber's subsidiary also sells rough diamonds which it readily supplies to Tiffany Co., another big diamond jewelry retailer. Tiffany has an exclusive suppliership contract with Aber. Cutting and manufacturing companies in Israel, Belgium, India, and the U.S. also source rough diamonds mainly from Aber. It also owns Harry Winston Inc., which is a diamond jewelry retailer. It designs and produces diamonds in Switzerland. Its salons are located all over the glitzy cities worldwide i.e. Beverly Hills, New York, Paris, etc. Harry Winston Inc. accounts for about 40 percent of Aber's revenues. (World Diamond Council, 2007) Aber leverages itself through rough diamonds which it mainly supplies to large retailers. (Harry Winston Website, 2010) It also has a competitive advantage of being involved in diamond manufacturing and retail sales, both of which are the most profitable parts of the global diamond value chain.
At present, the company provides its own requirements and even sells to other cutters, polishers, and manufacturers of diamonds around the world. It competes with DeBeers and overtakes the major diamond company through its Angola and Russian businesses. ALROSA supplies rough diamonds to Leviev and thus, Leviev is the first company to complete a diamond production without exporting the diamonds for cutting and other processes. It also owns Ruis, a company which is a former diamond cutting partner of ALROSA. It cuts $140 million worth of diamonds annually.
The company has factories in Ukraine, Israel, Namibia, China, Armenia, and South Africa. This market player embodies the process of industrial upgrading. For one, it has ended its relationship with De Beers (as a provider of rough diamonds) and its numerous retailers. It intends to independently explore, mine, cut, polish, designs, and retail its own diamonds. Having a fully integrated supply system, it has a very positive opportunity to increase its market shares.
Its Diamond & Minerals product group consists of diamond mining, refining and marketing operations. It operates through its subsidiaries: Rio Tinto Diamonds Ltd. (a global supplier of rough diamonds), Rio Tinto Minerals (engages in borates and talc supply with mines) and Rio Tinto Iron & Titanium Ltd. (produces high grade titanium dioxide). Being a large mining group, it also has an Iron and Iron Ore Product Groups as well as its Exploration and Technology & Innovation Product Group. Rio Tinto has global offices located at Australia, Canada, the United States and the United Kingdom.
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Ekati produces about 4 million carats of rough diamonds annually and this is about 3 percent of the world market share of rough diamond production in terms of weight. It constitutes about 6 percent of the world market in terms of value. Most of BHP Billiton's sales are gathered from the Antwerp Exchange Center. Billiton sells both rough and polished diamonds to many manufacturers. The company sells about 10 percent of its rough diamonds to Canadian manufacturers. It sells its polished diamonds through its contract polishing arrangements by its CanadaMark™ and AURIAS ™ brands. BHP Billiton is in a good market position since it has vital subsidiaries performing well for the major company in Australia. However, Billiton needs to expand into direct retail sales in order to retain and increase its market shares in the global diamond business.
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