The World
Diamonds are rare, valuable, and tightly controlled. Understanding who produces them, who buys them, and how the industry stays united tells you how global commodity markets really work.
The global diamond market moves roughly 130 million carats a year across borders, touching everything from engagement rings to industrial tools to investment portfolios. It is one of the world's most concentrated commodity trades: a handful of producing nations, a tight distribution system, and a century-old cartel-like arrangement that has shaped the entire industry. Australia is a major player in this system, and understanding diamonds reveals how powerful nations and companies engineer scarcity in global markets.
Diamond mining is geographically sparse. Russia, Botswana, the Democratic Republic of Congo, Angola, Canada, and Australia account for the vast majority of world supply. Australia's Argyle mine in Western Australia was the world's largest diamond producer by volume for three decades until it closed in 2020, but the country remains a significant player through other operations. Russia alone produces roughly one-quarter of the world's rough diamonds by value, though Western sanctions have disrupted its exports since 2022.
The concentration is deliberate. Diamond mining requires enormous capital investment, deep geological knowledge, and patience; discoveries are rare and decades-long. This natural scarcity is jealously guarded. Most producing nations sign into a system called the Kimberley Process, which certifies diamonds as 'conflict-free' and creates a cartel-like agreement to keep supply steady and prices high.
Raw diamonds flow from mines to a small number of sorting and trading hubs, primarily in Antwerp, Belgium, and India. This is where rough stones are graded, cut, and polished. The trade is opaque by design: prices are negotiated privately, and most transactions happen off public markets. A handful of large firms control vast portions of this middle layer.
From the cutting centres, finished diamonds move to retailers and jewellers, who set the final retail prices that consumers see. Crucially, retail markups are enormous-often 100 to 200 per cent above wholesale cost. This means the diamond your jeweller sells you bears little relationship to its intrinsic value; much of what you pay funds retail operations, branding, and marketing.
For industrial diamonds-used in drills, saws, and abrasive tools-the path is shorter and the pricing more transparent. These 'non-gem' diamonds are cheaper and less glamorous, but they represent a large part of global diamond use.
The diamond market is unusual because it resists the boom-and-bust cycles of other commodities. When diamond supply rises, major producers have historically agreed to hold or reduce output to avoid crashing prices. This informal cartel arrangement, most famously coordinated by De Beers for much of the 20th century, remains partly in place through looser coordination today.
Australia's Argyle mine closure is a case study. Rather than flooding the market with cheap Australian diamonds after the mine's scheduled end, the closure was managed carefully to prevent price collapse. This reflects the understanding that the industry's value depends on perceived scarcity, not actual scarcity.
Another mechanism is the Kimberley Process itself. By controlling which diamonds enter international trade, producing nations can collectively manage supply flows. However, the system is contested: critics argue it certifies diamonds from questionable sources, and some producers have withdrawn or been suspended.
Australia's diamond industry generates billions in export revenue and thousands of jobs, particularly in Western Australia. But it also reveals Australia's dependence on commodity markets where a handful of producers hold structural power. The closure of Argyle showed that even the world's largest diamond operation remains subordinate to global market coordination. Understanding this dynamic matters for how Australia approaches other mineral and resource trades-whether lithium, rare earths, or agricultural exports-where a few nations can shape global pricing and supply.
Australian consumers also feel the diamond market's structure indirectly. The engineered scarcity that keeps diamond prices high is a feature, not a bug, of how the industry works. Australians buying diamonds are paying for rarity that is actively maintained, not naturally scarce.
The diamond market demonstrates how global commodity trades can be structured to benefit producers over consumers. Supply is concentrated, distribution is controlled, and prices are maintained through coordination rather than competition. Australia's role as a major producer gives it leverage in this system, but also binds it to an industry that prioritises managed scarcity over transparent pricing. For a nation that relies on commodity exports, the diamond market is a masterclass in how power shapes global trade.
This article was compiled by AI and screened before publishing. See our editorial standards.
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