document: IT IS ironic that there is an unprecedented , greedy rush for diamonds by miners in Angola and Canada precisely at a time when the diamond business is in turmoil and questions are inevitably being asked about the ability of the world 's most successful cartel to keep its tight grip on the market . In Canada 's Northwest Territories , the discovery of 81 small diamonds , some of gem quality , has sparked the biggest rush to stake mining claims in the history of the North American industry . Stakers are using helicopters because each claim area is so large and prospectors have claimed every piece of land within 300 km -LRB- 185 miles -RRB- of the discovery . In spite of all this hectic activity , it is very unlikely that anyone will find enough big diamonds to make the development of Canada 's first diamond mine worthwhile . The odds in favour of making a fortune are much better for the diamond hunters in Angola . More than Dollars 1m-worth of gem diamonds a day are being smuggled out of that country for sale in Antwerp . An estimated 50,000 private-enterprise diggers are at work already and their numbers are being swelled by 500 a day . This rise of illegal mining , particularly in the Cuango region , which produces 80 per cent of Angola 's diamonds and some of its highest-quality gem stones , started in May , 1991 , after the peace accord which allowed freedom of movement for the first time in 16 years . As well as experienced miners , many soldiers who could not find civilian jobs have made their way to the diamond areas . The onset of the dry season and the fall in river levels from the end of May this year has encouraged what De Beers , the South African group that dominates the world diamond business , describes as ' a sudden and unprecedented explosion in the supply of illicit Angolan diamonds reaching the market ' . Even though there are so many diggers at work , questions are being asked about whether there might be more to this ` explosion . ' Did Unita , Angola 's rebel movement , build up a stockpile which is now being released ? Is Endiama , Angola 's state-owned diamond company , implicated in some way ? In the murky world of diamond dealing such rumours abound . De Beers probably knows the answers because its intelligence network is remarkable . What is also remarkable is that all those scrambling for diamonds in Angola or dropping out of the skies to stake expensive claims in Canada take it for granted that the diamond cartel will be able to continue to keep prices up and make all their efforts worthwhile . The cartel has survived partly because nobody needs diamonds . They are composed of very hard carbon so they can be useful for drilling holes in tough material , but there are substitutes for this use . Gem diamonds are solely for decoration and serve no useful purpose . But the cartel has ensured that rough -LRB- uncut -RRB- diamond prices have risen steadily since the 1930s - even when in the depths of the 1981-86 recession the price of a top-quality , one carat gem diamond slumped in the retail market from Dollars 60,000 to Dollars 10,000 . The cartel is organised by De Beers ' London-based Central Selling Organisation , which markets about 80 per cent of the world 's rough diamonds . Apart from De Beers ' own production from Namibia and South Africa , the CSO handles rough gem diamonds from Angola , Australia , Botswana , Russia , Tanzania and Zaire . The CSO has been mopping up as many of the smuggled Angolan diamonds as possible to stop havoc being created in a business already suffering severely from soggy demand in the US and Japan , the two biggest markets , which share about two-thirds of demand between them . De Beers says that , because times are tough . it will probably have to cut its annual dividend payment for the first time since 1981 . It has also told the producers to cut deliveries by 25 per cent - something the CSO contracts permit at times of stress . De Beers releases a controlled stream of rough diamonds to the market through ` sights ' offered by the CSO ten times a year to about 160 selected buyers . They are offered boxes of diamonds , each worth between Dollars 500,000 and Dollars 25m . The contents are judged by the CSO to balance the requirements of the buyers with market demand . Buyers have either to accept all the diamonds or reject the box . Mr Harry Oppenheimer , whose family effectively controls both De Beers and its sister group , the Anglo American Corporation of South Africa , was defending the cartel again last week at the formal opening of the R1 .1 bn Venetia diamond mine in the Transvaal . ` The CSO does not , and could not , run a monopolistic system , ' he said . ` In bad times like this , I sometimes wish that we could . The fact is that the level of world diamond production , which is carried on in many countries , can not be controlled . Diamond prices can not be fixed artificially but have to be set at a level which allows production and consumption to be equated . ` What the CSO for many years has done successfully , is to operate a buffer pool , stocking diamonds in bad times and liquidating its stocks when demand is in excess of the level of supply . In this way it has been able to preserve an essential degree of stability in the price of this ultimate luxury of gem diamonds , to the common advantage of producers , processors and consumers of this unique natural product . ' All very altruistic . But De Beers makes huge profits from its diamond business - a record Dollars 1.24 bn in 1990 and more than Dollars 1bn last year . The cartel nearly lost control of the market in the early 1980s . It was a time of galloping inflation , a weak dollar and low interest rates . Merchants , particularly in Israel , stockpiled diamonds on borrowed money as a hedge against inflation and when recession hit they had to dump diamonds faster than the Central Selling Organisation could mop them up . The CSO 's diamond stocks , worth under Dollars 1bn in 1980 rose to Dollars 1.9 bn by 1984 . Hundreds of diamond investment trusts and traders were bankrupted at that time and Australia and Zaire challenged De Beers ' near-monopoly . De Beers has taken good care that merchant stocks have never again been built for speculative reasons , frequently going to the banks , the potential financiers of stockpiling operations , to ` educate ' them about the way the diamond market works . After the bust came boom . Diamond sales in value terms jumped by 20 per cent in 1987 and another 37 per cent the following year . To cool the market , the CSO imposed swingeing price increases : 13.5 per cent in May 1988 and 15.5 per cent in March 1989 . Underlying the boom was phenomenal growth in demand for diamonds in Japan where lack of living space encourages people to display their wealth by buying small but expensive items . The CSO boosted the trend with clever promotion so that today diamond engagement rings are regularly exchanged in Japan whereas forthcoming marriages traditionally were celebrated over a cup of rice wine . It must be open to question whether another Japan can be found to lift the diamond market as the present recession ends . But in the meantime Mr Julian Ogilvie Thompson , De Beers ' chairman , insists that the CSO 's control of the diamond market is not slipping . ` By mopping up Angolan supplies we can say that more of the world 's rough diamonds are passing through the CSO than ever before , ' he says . ` By applying the deferred purchases clauses in our contracts with producers we are applying the right medicine to ensure that demand matches supply and that the diamond market will remain stable ' . The future of De Beers ' diamond operations in Namibia were discussed with the government there yesterday . In the past there have been suggestions that CDM , De Beers ' wholly-owned subsidiary , might be at least partly nationalised . CDM , has diamond mining operations over a coastal area extending 100 km north of the Orange River and recently brought the Auchas and Elizabeth Bay mines into production . Last year Namibian output reached 1.19 m carats , up from 750,000 . ------------------------------------------------ ROUGH DIAMOND PRODUCTION -LRB- MILLION CARATS -RRB- ------------------------------------------------ 1991 1990 1987 ------------------------------------------------ Australia 36 36 30 Zaire 19 24 21 Botswana 16.5 17.3 13 CIS 13 15 12 South Africa 8.2 8.5 9.6 South America 1.4 0.8 1 Angola 1.3 1.3 0.9 Others 1.8 2.1 2.35 ------------------------------------------------ Source : Metals & Minerals Annual Review ------------------------------------------------
extractive_keyphrases: world diamond business rough diamond production diamond market diamond sales diamond prices diamond cartel canada greedy rush first diamond mine diamond hunters
abstractive_keyphrases: london-based central selling organisation