"Have You Ever Tried to Sell a Diamond?" (February 1982)
An unruly market may undo the work of a giant cartel and of an inspired, decades-long ad campaign. By Edward Jay Epstein.
At a diamond cutter's in Johannesburg not long ago, a touch of the saw very nearly ruined an 8.5-carat stone. "It had a hole in one side and two gletzes on the other," said Derek Henderson, the beefy, laconic Englishman who runs the operation. A gletz is a visible flaw inside a diamond. Henderson gazed at the shattered gem as he continued: "We took a cut through the gletzes and had just started to polish off the hole when another gletz shot through the stone."
Henderson's cutters managed to salvage part of the diamond, keeping their losses under $20,000. But sometimes a gem will burst into powder when a saw hits the skin of a structural flaw—a flaw that may be invisible even through the lens of an ordinary loupe. And that's not the only danger.
"I'd bought a blue, a good sky-blue," a well-known Johannesburg diamond dealer told me. A blue is a "fancy," a category of nonwhite diamond; the more vivid the color, the higher the price. "We started polishing, putting in facets. Suddenly, as the cutter added a facet, the color changed from blue to light blue—from two hundred and sixty thousand dollars a carat to forty thousand dollars a carat." The dealer had been aiming for a four-carat finished stone: in an instant $880,000 evaporated before his eyes. He was lucky, though. "When we put in the next facet, the color jumped right back."
Like the stones themselves, the diamond trade is highly unpredictable. Gemstone diamonds have no intrinsic value; their worth depends on the buyer's act of faith. Keenly aware of this, the diamond world harbors a secret fear that the trade itself might hit some hidden flaw and crumble. Still, so far so good.
Consider this: Two years ago a pair of South African adventurers retrieved a 23-carat intense-pink fancy from the bottom of the Chicapa River, in Angola. They sold it at the diamond bourse in Johannesburg for $4.4 million. The buyers polished it into a 10-carat gem. They reportedly sold it for $9 million to middlemen, who are said to have sold it in turn to the Sultan of Brunei's brother for $20 million—this for a stone the size of a raisin.
Most diamonds come from big recovery plants—places fortified with razor wire, alive with arms, popping with the mechanized jets of air that blast the gems from streams of gravel rattling through the plants. Security is a ceaseless preoccupation: the global output of "rough," as uncut diamonds are called, is worth about $7 billion a year, and "leakage," or theft from the mining process, is relentless. Perhaps this is inevitable—after all, General Motors doesn't have to worry that workers on the production line are swallowing doors, but a 10-carat stone goes down like a pea.
As a result, the diamond trade is awash in contraband. Hundreds of millions of dollars' worth of smuggled diamonds leave Angola every year. Bootlegged goods poured out of Russia, too, until 1997, when De Beers, the world's largest diamond-mining company, forged an agreement whereby Russia sells at least half its production to the London-based Central Selling Organization—some $550 million worth of rough each year. The Russians keep the rest for domestic polishing; naturally, some of this joins the sea of smuggled gems.
Less well known to the outside world, but infamous in the trade, is the steady flow of stolen diamonds from Namaqualand, a sandy slab of South Africa along the Atlantic coast. Namaqualand's pan-hot desert and scraped little hills start north of Cape Town and run up to the Orange River, which forms the Namibian border. The ocean breaks on a forbidding shore. Not much happens in Namaqualand—except for the stealing of diamonds. In Namaqualand, stealing diamonds is the proper work of man.
"God put the diamonds here," says Frikkie Mostert, "and He put nothing else. People here think the diamonds belong to them." Mostert runs a diamond-recovery plant in the village of Port Nolloth for the South African company Trans Hex Group. Port Nolloth is on the Diamond Coast, a four-hundred-mile stretch of beach that begins at the Olifants River and extends into Namibia. If anyone is going to be strapping stolen diamonds to homing pigeons, or pressing them under his fingernails, or strolling through the sorting house in boots whose soles have been impregnated with adhesive, the Diamond Coast is a good place to find him.
Diamonds arrived in Namaqualand millions of years ago, tumbling down the rivers and into the sea. When the ocean receded, some of the diamonds remained on the beach. Others are embedded in gravel on the ocean floor. In short, a great swath of diamonds lies along the coast, and millions of dollars a year pour into the efforts to retrieve them. The area, land and sea, is a grid of mining concessions. At Kleinsee, where the Buffels River meets the ocean, De Beers strips the shore. Alexkor, South Africa's state-owned mine, controls the beach to the north and maintains a flotilla of inshore diamond boats. Ten miles inland Trans Hex combs a long-buried former bed of the Orange River. But across the river, in the southwest corner of Namibia, is the real prize—a 10,140-square-mile tract of land identified on maps as Diamond Area 1. It was once the richest diamond ground on earth and still produces an abundance of high-quality stones. Mining rights to the area belong to Namdeb, a consortium of De Beers and the Namibian government. Namdeb holds a special place in the hearts of those who live in Namaqualand, whose arid landscape it helps to water with the only rain that counts there—stolen diamonds.
Beach mines are a thief's delight. In open pits, by contrast, workers rarely come face-to-face with diamonds: heavy equipment scoops out the ore and feeds it to the plant. But on the beach, diamonds sit on the old seabed. Miners strip away the "overburden," non-diamond-bearing sand and gravel, and sweep the bedrock for gems. Until recently they did the sweeping with whisks. Now Namdeb uses huge vacuum machines instead, to make it more difficult for miners to come into direct contact with diamonds. In addition, the mines offer a bounty for every loose stone turned in. So do illicit diamond buyers in Port Nolloth.
Let's say a miner spots a diamond. He may glance around to make sure that security guards are looking the other way, and press the diamond under his fingernail for later transfer to another receptacle, such as his mouth. In the event that members of the security force have been corrupted (always a possibility), he needn't be that careful. The next step is to get the diamond out of the mining area. In one scheme workers smuggle trussed homing pigeons out to the mining areas in lunch boxes. They fit the birds with harnesses, load them with rough, and set them free. Sometimes the thieves are too ambitious. Security officials at Namdeb caught one thief when they found his pigeon dragging itself along the ground, its harness loaded beyond takeoff capacity.
Another time a thief smuggled in the pieces of a crossbow, later sending a volley of hollow bolts freighted with diamonds arcing over the fence, for retrieval by a confederate. This scheme ended when an unlucky shot fell to earth in front of a security jeep. Diamonds are dropped into the gas tanks of machinery leaving the beach, and inserted into razor cuts in tires; collaborators remove them later. Miners wedge diamonds behind sweatbands, tap them into ears, and insert them in other orifices. At one De Beers mine, security guards caught a thief only because he'd inserted so many gems into his rectum that he was waddling. Diamonds fluoresce under x-rays, and Namdeb uses x-ray scanners on employees leaving the mining area. But as miners well know, the cumulative health hazards posed by x-rays dictate random use. The scanner always makes a noise, but it is not always taking an x-ray. So the miners take their chances, and diamonds slip through.
A good number of the diamonds filched from Alexkor and Namdeb find their way down the coast to Port Nolloth, a hamlet with few visible means of support but with a flourishing population of BMWs. At the north end of town stands a cluster of neat concrete villas, painted ocher or white. Each has a shiny German car or two parked out front. It is common knowledge in the area that illicit diamonds paid for some of these villas. The south end of town is marked by the pier that serves Trans Hex's tiny recovery plant—Frikkie Mostert's plant. The municipal dock nearby makes a stubby L. A small fleet of forty-foot fiberglass boats, called tupperwares, bobs in the shelter of the reef. Most are independently owned, and contract their services to diamond companies.
On the rare days when the wind subsides, crews and divers pile aboard and the tupperwares go rolling out to sea, trailing suction hoses. Reaching their inshore concessions, the boats toss on the swell; divers splash into the frigid water. At a depth of a hundred feet they wrestle steel nozzles into the muck. Larger ships work farther out. Indifferent to the heavy seas, remote-controlled tractors lowered from these ships creep along the ocean floor, harvesting gravel.
Although the fleets contribute stolen rough, Port Nolloth really lives off booty from the beach digs of Alexkor and Namdeb. The industry knows this; the South African police know it. Mostly they live with it, having little choice.
Consider the last raid on the town, four years ago. With a ferocity born of frustration, officers from the diamond branch of the police pounced on Port Nolloth. They focused on the town's Portuguese, who had fled Angola in 1975, at the end of Portuguese rule, and are thought to be particularly active in the illicit diamond trade.
On the day of the raid the diamond branch gathered its forces near Kleinsee. Vehicles full of heavily armed police officers sped north. A helicopter clattered into the air. They all headed for the Portuguese country club, south of Port Nolloth. The club is surrounded by a wall topped with razor wire. The helicopter racketed over the wall and hovered. Combat officers slid down ropes into the green oasis of the grounds and charged the clubhouse.
"They had food," says Derrick Clampett, a seasoned diamond detective who participated in the raid. "They had booze. They were ready for a party. The diamond scales were all set up, there were loupes—the whole business. But there weren't any diamonds. We were a day early. Later we raided a house and found $250,000 in cash."
"Yes," adds Koos Jooste, who heads the diamond branch's Cape Town detachment, "but the possession of money is not illegal in South Africa."